X5 Group (Пятерочка). Годовой отчет за 2021 год - часть 13

STRATEGIC REPORT

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RETAIL INFRASTRUCTURE

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LOGISTICS

98

Pyaterochka Logistics

Developing efficient and robust 
business processes

A pilot for avocado ripening was successfully 
conducted at our Podolsk banana ripening station. 
Plans are in place to expand this process to cover 
all ripening stations in 2022

An external banana ripening station was launched 
in the Southern macro-region

Vegetable storehouses in the North-Western and 
Ural macro-regions were opened, doubling storage 
volumes vs 2020 to 6,000 tonnes

Pyaterochka’s logistics operations, which includes 
38 DCs, were serving the 17,972 stores operating 
in 67 Russian regions as of 31 December 2021. 

One of the main priorities in 2021 was to maintain 
service levels in stores despite global labour 
and transport shortages. Our product availability rate 
was 91.1% in 2021, reaching 93.8% in December 2021. 

Other key 2021 highlights

In an Advantage study, we moved up one position 
to second place in an integrated supplier 
assessment and for the sixth year in a row, we ranked 
first in terms of supply chain management

In 2021, the Supply Chains team developed 
integrated planning tools both for suppliers and for 
X5’s internal use: 15 of our most mature suppliers 
were connected to a CPFR (collaborative planning, 
forecasting and replenishment) tool and to a joint 
sales forecasting tool

An end-to-end stock model and sales and 
operations planning process were launched in 
conjunction with RVI (X5 importing legal entity), 
helping to make imported goods more affordable 
as well as optimising inventory throughout the 
supply chain

Six new facilities were added to the warehouse 
infrastructure: two new distribution centres 
in Kursk and Krasnoyarsk, as well as four 3PL sites 
(in Orenburg, Ekaterinburg, Izhevsk and Moscow)

Expanding digitalisation

Added seven new DCs to the rollout of the 
Manhattan target warehouse management system, 
bringing the total number to 12

The warehouse mobile app gained additional 
modules for “placement and storage” as well as 
“dispatch”

Rollout of the JDA Distribution Centre and Store 
Restocking project continued, which supports the 
end-to-end process for the movement of goods 
from distribution centres to stores as well as 
automation of the restocking processes

Microservices that work with both the existing and 
new restocking systems such as Orchard were 
introduced. Orchard is an automatic tool for 
restocking DCs with fruits and vegetables that 
provides access to data directly from WMS systems, 
while also enabling the monitoring of goods in the 
supply chain on an hourly basis

Machine learning-based regular sales forecasting 
is being rolled out. The solution has already been 
implemented in three macro-regions for four out 
of five product categories

STRATEGIC REPORT

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RETAIL INFRASTRUCTURE

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LOGISTICS 

99

2021

2021

2020

2020

2019

2019

2018

2018

2017

2017

2016

2016

2015

2015

41

53

4.6

5.7

87

106

6.5

8.5

90

108

6.5

8.3

87

103

6.3

8.2

86

98

6.0

8.3

74

86

5.9

7.6

52

62

5.2

5.9

2.91

2017

3.31

2016

3.54

2015

2.86

2018

2.67

2019

2.61

2020

2.68

2021

−24.3%

+99%

3 best DCs
2015–2021

+49%

3 best DCs
2015–2021

+113%

Company average
2015–2021

+42%

Company average
2015–2021

Operational efficiency gains

Storage and transport costs (excl. pickup, incl. recyclable materials), 

% of sales

OWR, 

boxes/hour

DC throughput, 

boxes/m²

Company average

3 best DCs

Company average

3 best DCs

We took measures that offset most of the increased cost investments in warehouse
and transport personnel aimed at ensuring guaranteed service for operations in a tight
labour market

Key warehouse efficiency metrics in terms of DC throughput and overall warehouse 
performance remained at a consistently high level

The positive effect of efficiency projects totalled RUB 387 mln 
in 2021

The availability of top-5 SKUs in each category increased 
by 0.3% y-o-y

The increase in the forecast accuracy was achieved by the 
introduction of a demand forecasting model that allows to 
predict the demand for goods at the store-item-day level within 
a 16 weeks horizon. The forecast accuracy increased by 9.4 p.p.

STRATEGIC REPORT

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RETAIL INFRASTRUCTURE

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LOGISTICS 

100

Process maturity

Achieving sustainability goals

Pyaterochka was selected as the winner in the 
“Best Mentor” category at the Izotov Cup national 
competition

Supply Chain Management Division won the top 
prize in X5’s Idea Challenge corporate innovation 
competition. The division’s “Axle Load” project was 
the clear winner among the competition finalists

Pyaterochka became a special partner for the 
“Strong Link: Student League” interuniversity 
competition, with the aim of being strengthening 
the Company’s pool of potential candidates

In 2021, supply chains participated for the first time 
in the annual Top 100 Dialog supplier conference, 
where they shared their experience and expertise 
at around a dozen specialised discussion forums 
and conferences

Plans for 2022

Main focus is on ensuring the business continuity

Continue implementation of Manhattan warehouse 
management system

Continue rollout of the JDA 

 project

Distribution Centre and 

Store Restocking

Continue rollout of the Machine learning-based 
Regular Sales Forecasting

Donated 8,254 LEGO sets to 
orphanages in December 2021

Underwent preparations for 
Pyaterochka DCs to receive ISO 
14001 environmental 
management certification, 
including an assessment 
of business processes, energy 
efficiency, waste management 
and other factors

“Children's Days” are held every 
year at Pyaterochka DCs

Implemented the “Comfortable 
DC” project for the second year 
in a row, including the 
development of meals based on 
employee feedback and the 
creation of fitness areas at all 
Pyaterochka DCs that are 
accessible outside of working 
hours

Completed an assessment for 
ISO 45001 occupational health 
and safety certification and held 
training sessions for employees

Ran an awareness-raising 
session to reduce the risks 
of COVID-19 infection and offered 
on-site vaccination clinics at DCs

STRATEGIC REPORT

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RETAIL INFRASTRUCTURE

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LOGISTICS 

101

Perekrestok Logistics

Physical logistics

Decreased logistics costs as a share of retail 
turnover by 0.03% due to efficiencies in warehousing 
and transport logistics as well as handling 
of returnable tare

DC operations achieved an average 4% year-on-year 
increase in productivity thanks to the warehouse 
logistics operational efficiency project

Improved the cost efficiency of transport 
due to a 2.2% year-on-year increase in the average 
box per trip

Migrated to trusted receiving processes at five DCs, 
which reduced resources required at stores for 
accepting goods from DCs 

Improved the quality of fruits and vegetables 
through implementation of remote quality 
acceptance at registration centres

Ensured fresh product quality by introducing 
automatic temperature monitoring sensors 
for all DCs

Procured additional transport to manage risks 
of vehicle shortages

Secured Perekrestok’s entry into new territories 
(Murmansk, Apatity)

Supported supply chain operations for Chizhik 
and 5Post

Key 2021 highlights 

To support product availability, freshness and 
quality based on regional characteristics, 
operational logistics were decentralised to speed 
up decision-making and flexibility

To ensure a high level of shelf availability, 
a single planning function was established, with 
responsibility for end-to-end forecasting, planning 
and replenishment processes from the supplier 
to the store shelf

To improve management efficiency and the 
availability of transport despite labour and vehicle 
shortages, a centralised transport management 
centre was created

To support strategic infrastructure development, as 
well as implementation of strategic transformational 
efficiency projects and to lead the digitalisation 
of the supply chain, a new strategic supply chain 
development function was established

Planning

Inventories decreased by 1.9 days year-on-year, 
as a result of greater accuracy in promo forecasting, 
efficient management of assortment matrices 
and the introduction of best global practices 
for insurance inventory planning 

Availability decreased by 0.9% year-on-year to 93.9% 
due to transport shortages for replenishment 
in the first half of 2021 and a 2% year-on-year decline 
in service levels from suppliers due to global 
problems with import supplies

Launched end-to-end integrated planning process 
with RVI for vegetable/fruit and liquor categories to 
ensure uninterrupted supply during the hot season

Significant year-on-year increase in forecast quality 
(+7% in promo, +0.8% in regular) due to 
the development of the Forecast digital 
transformation product

Perekrestok's logistics operations serve its own 
supermarkets and Karusel hypermarkets. Throughout 
2021, we implemented changes to further improve 
the efficiency, quality and digitalisation of our 
operations. 

Perekrestok’s logistics operations included 9 DCs 
as of 31 December 2021, which helped to support 
the operations of 990 supermarkets and 33 Karusel 
hypermarkets across 19 regions of Russia.

Plans for 2022

STRATEGIC REPORT

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LOGISTICS 

102

Opening of Voronezh DC

Launch of Implant programme with top suppliers 
to improve availability and reduce losses

Implementation of logistical solutions together with 
suppliers to reduce the cost of the supply chain from 
production facility to store shelf

Improve the freshness and quality of products 
on shelves through the implementation of the 
Freshness digital product and infrastructure projects 
to maintain target temperature levels in cold chains

Launch of Lean DC programme to improve 
efficiencies in warehouse logistics

Increasing vehicle turnaround and routing automation 
for more efficient transport logistics

New WMS implementation project launched

Automation of forecasting and replenishment 
processes (hands-free planning)

Implementation of global safety culture practices 
on all DCs 

Further optimisation through implementation
of a digital replenishment product

Centralisation of recyclables as an additional source 
of revenue for the network

Launch of Supply Chain Academy for management 
staff and qualification centres for CP line staff

X5 Transport

Our logistics network is the most efficient 
and best way for us to transport goods from 
suppliers to our store shelves, where 
customers can rely on the quality and 
availability of our assortment.

Efficient and reliable transport operations are key to 
multiple aspects of our strategy, from strengthening 
existing operations by reducing costs to supporting 
the development of new businesses that use our 
transport capacity to offer services like last-mile 
delivery. 

Our transport operations are also important to 
achieving our sustainability goals, with ongoing efforts 
to reduce the CO2 emissions of our fleet, ensure the 
safety of our drivers and ensure we can preserve the 
freshness of our growing assortment of fresh produce 
and fruits and vegetables across the more than 
19,000 stores we operate.

STRATEGIC REPORT | RETAIL INFRASTRUCTURE | X5 TRANSPORT

103

As of 31 Dec 2021

4,654

Trucks in X5 Transport’s fleet

Handled about 

% 

of our deliveries
during the year

70

Plans for 2022

STRATEGIC REPORT

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RETAIL INFRASTRUCTURE

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X5 TRANSPORT

104

Key achievements in 2021

One of the key challenges we faced in 2021 was the 
scarcity of labour. In response, we increased our 
investment in human resources considerably, 
improving X5 Transport’s appeal as an employer for 
drivers. We also continued taking steps to improve 
working conditions for drivers and other employees, 
with portals providing personal payroll services 
introduced for drivers, renovation of break rooms for 
drivers to offer them modern and comfortable facilities, 
as well as joint programmes with equipment 
manufacturers on safe and efficient driving. In order to 
support further training and education for our drivers, 
instructors and mentors were added as permanent 
positions.  

We continue to develop our own fleet and purchased 
692 new trucks during 2021 to upgrade and expand 
our in-house operations. In order to ensure the 
necessary flexibility and scalability, we have also 
updated the way we work with external carriers in order 
to provide more stable terms for doing business. 

In 2021, many of our suppliers faced a shortage of 
vehicles for deliveries. In helping resolve our partners’ 
problems, X5 actively developed a service for suppliers 
for self-pickup and commercial deliveries. This service 
expanded by about 30% vs 2020.  

To support the development of the regional network, 
new cross-docking centres were opened in Murmansk, 
Irkutsk, Salekhard and Izhevsk. 

X5 Transport’s unified digital platform continued 
to develop. We have expanded the use of big data 
to power artificial intelligence systems to improve 
transport efficiency, and we continue to scale up 
services and solutions for planning and monitoring 
X5’s fleet and hired transport. Progress continues 
to be made in electronic document management: 
in 2021, we began using electronic consignment 
documents for internal shipments undertaken by our 
own fleet (more than 60% of the total number of trips). 

The X5 Transport electronic data interchange system 
facilitated payments for the purchase of spare parts, 
consumables and services. We also piloted 
an exchange of electronic documents with fuel 
companies, developed an electronic service for truck 
insurance and introduced personal accounts 
for drivers. 

We also introduced the innovative Antison system 
in 2021. Antison makes it possible to monitor a driver’s 
physical condition behind the wheel, to monitor the 
road and to track the driver’s condition while in transit.  

Thanks to the introduction of gas–diesel engines and 
other technical solutions, atmospheric greenhouse gas 
emissions decreased by 10% year-on-year. In 2021, 
monitoring and reporting on our work involving 
industrial waste from our transport-related business 
processes improved. 

Further develop the X5 Transport unified 
digital platform: speeding up processes 
through automation, expanding channels 
for fulfilling orders using our own fleet and 
a rental fleet, adding convenient services 
to the app for drivers   

Develop electronic document management 
and convert the remaining transport 
documentation into a digital format 

Continue to test and incorporate equipment 
that operates on gas and alternative fuels 

Expand our delivery coverage, open up new 
cross-docking centres for our retail formats 
and develop international deliveries

Launch strategic partnerships with major 
transport companies in the market for
city-based and intracompany transport

Improve the efficiency of our own 
maintenance depots due to the lack 
of external service centres for servicing 
equipment

Focus on ESG: reduction of empty runs 
and responsible consumption of resources 
(water, energy, waste) 

STRATEGIC REPORT

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RETAIL INFRASTRUCTURE

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DIRECT IMPORTS

Direct 

imports

Key achievements in 2021

We continued to develop our own Infrastructure 
with the opening of a hub in Ekaterinburg. This new 
operational site will help to improve the delivery of 
direct imports to the Urals and Siberia regions as the 
geography of our business continues to grow. We have 
also been able to support further development 
of private label goods through our direct import 
infrastructure.  

In order to enable greater flexibility during peak 
seasons for key imported goods, we have diversified 
the modes of transport and methods of transhipment 
we are able to use for citrus fruits, which now include 
deliveries through a hub, cross-docking at a port and 
deliveries by rail to various regions). 

As we seek to continuously improve the efficiency 
of our operations, we developed an IT platform that 
makes it possible collect offers and conduct online 
bidding with import suppliers of fruit and vegetables. 

As a result of continued business growth and progress 
on developing our operations, X5 Group’s direct 
imports increased by 17.5% year-on-year, with 
significant growth year-on-year in categories such as 
drinks (up 158%), non-food products (up 91.8%) and 
groceries (up 45%). 

In order to support the further development of X5 
Group’s online businesses, we also launched a sorting 
line to handle 5Post shipments. 

Plans for 2022

TOTAL SHARE
OF DIRECT IMPORTS

2020

5.3

%

2021

5.7

%

1

NOVOROSSIISK

2

PULKOVO 

4

BOGORODSK

As of the end of 2021, 
the Imports business unit 
was operating four hubs:

EKATERINBURG

3

Focus on improving

procurement efficiency

by conducting bidding in the fruits 
and vegetables category on our 
IT platform, sourcing new countries 
and suppliers, and concluding direct 
contracts with import producers

Expansion of warehouse 

infrastructure

expansion of the Bogorodsk hub 
to increase direct import supply 
of drinks, grocery and non-food

Improving the timeliness

of deliveries of direct imports 

Development of imports

from the countries of Central Asia
(stone fruits, melons, cabbages,
onions, nuts) 

105